Key Takeaways
- • Saudi Arabia's pension system score was upgraded from C to C+ in Mercer and CFA Institute's 2024 Global Pension Index, placing it alongside the US, the UAE, and Spain.
- • The UAE's retirement income system improved its score for the fourth consecutive year and ranked 23rd worldwide, five places ahead of Saudi Arabia.
- • The Netherlands retained the top spot in the 2024 index, which assessed 48 pension systems, with Iceland and Denmark placing second and third.
- • Saudi Arabia raised its retirement age from 60 to 65 for public and private sector employees in July 2024 as part of a Vision 2030 reform.
- • Mercer recommended that the UAE increase occupational pension coverage and state pension age, and that Saudi Arabia raise minimum support for low-income seniors.
Summary
Mercer and the CFA Institute released the 2024 edition of the Global Pension Index, which assesses the strength, adequacy, integrity and financial solidity of 48 pension systems worldwide. The Netherlands retained first place, having ranked in the top three for six consecutive years, largely due to the size of its pension sector and its financial solidity. The authors noted that the Dutch system continues to move from a defined benefit structure toward individual defined contribution arrangements, and that it features strong regulation and member guidance. Iceland and Denmark ranked second and third, Israel fourth, and Singapore, Australia and Finland fifth through seventh. Norway placed eighth, Chile ninth and Sweden tenth.
Saudi Arabia's score improved slightly, moving from C to C+. Mercer defines C+ as a system with good features but significant risks that need addressing. The Kingdom's retirement system includes an earnings-based pension and a lump-sum award, with those who do not qualify for monthly payouts receiving only the one-off benefit. Tarek Lotfy, president of Mercer in India, the Middle East and Africa, said Saudi Arabia continues to make steady progress and stands to benefit as more private pension options are introduced. He added that the reforms support the aims of Vision 2030 by contributing to citizens' financial well-being and helping retain talent. The Kingdom raised its retirement age from 60 to 65 for public and private sector employees in July. Claudia Maldonado, a Mercer leader in the Middle East, said Saudi Arabia's youthful population and rising labor force participation place it well to learn from peers' challenges. Mercer suggested increasing minimum support for low-income seniors and raising labor force participation among older individuals as life expectancies rise.
The UAE's retirement income system improved its score for the fourth year in a row, rising to 23rd globally. The gain was driven mainly by a minimum access age for benefits, announced in November 2023. The UAE ranked 12th globally for adequacy, supported by generous retirement benefits, and 25th for integrity, supported by its governance structure. The system combines a means-tested minimum state pension with an earnings-related employment-based scheme administered by the Abu Dhabi Pension Fund, the Sharjah Social Security Fund, and the General Pensions and Social Security Authority for the remaining emirates. Employees contribute 5% of salary and employers contribute 12.5% to 15%, with benefits guaranteed by the government. According to the report's authors, the UAE could raise its index value by expanding occupational pension coverage, improving member communication, increasing the state pension age and reducing household debt. Lotfy described the UAE's approach as far-sighted, while Maldonado said the country has recognized the global shift from defined benefit to defined contribution plans and is encouraging flexibility and personalization.
Saudi Arabia's score improved slightly, moving from C to C+. Mercer defines C+ as a system with good features but significant risks that need addressing. The Kingdom's retirement system includes an earnings-based pension and a lump-sum award, with those who do not qualify for monthly payouts receiving only the one-off benefit. Tarek Lotfy, president of Mercer in India, the Middle East and Africa, said Saudi Arabia continues to make steady progress and stands to benefit as more private pension options are introduced. He added that the reforms support the aims of Vision 2030 by contributing to citizens' financial well-being and helping retain talent. The Kingdom raised its retirement age from 60 to 65 for public and private sector employees in July. Claudia Maldonado, a Mercer leader in the Middle East, said Saudi Arabia's youthful population and rising labor force participation place it well to learn from peers' challenges. Mercer suggested increasing minimum support for low-income seniors and raising labor force participation among older individuals as life expectancies rise.
The UAE's retirement income system improved its score for the fourth year in a row, rising to 23rd globally. The gain was driven mainly by a minimum access age for benefits, announced in November 2023. The UAE ranked 12th globally for adequacy, supported by generous retirement benefits, and 25th for integrity, supported by its governance structure. The system combines a means-tested minimum state pension with an earnings-related employment-based scheme administered by the Abu Dhabi Pension Fund, the Sharjah Social Security Fund, and the General Pensions and Social Security Authority for the remaining emirates. Employees contribute 5% of salary and employers contribute 12.5% to 15%, with benefits guaranteed by the government. According to the report's authors, the UAE could raise its index value by expanding occupational pension coverage, improving member communication, increasing the state pension age and reducing household debt. Lotfy described the UAE's approach as far-sighted, while Maldonado said the country has recognized the global shift from defined benefit to defined contribution plans and is encouraging flexibility and personalization.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.